Increasing of the oil products transportation volumes, development of the oil products trunk pipeline system optimized for the Russian market.

• Maintenance of safe, accident-free transportation of oil products.
• Increased participation of the Company in transportation, building new routes for fuel transportation.

• Further extension of the OPTP network, increasing the throughput capacity of the existing oil products pipelines.

Transnefteproduct, JSC, was founded

in line with Decree No. 1403 of the President of the Russian Federation, dated November 17, 1992 – «On specifics of privatization and corporatization of state-owned enterprises, production and research-and-production associations operating in the oil industry, oil-refining industry and oil product supply sector» – and Decree No. 871 of the Council of Ministers – the RF Government, dated August 30, 1993 – «On Incorporation of Joint-Stock Company for Pipeline Transportation of Oil Products ‘Transnefteproduct’».

Authorized Capital of the Company

totals 1,263,952,668 rubles and is divided into 1,263,952,668 registered common shares having the nominal value of 1 ruble each.
By Decree No. 473 of the President of the Russian Federation, dated April 13, 2007 – «On Joint-Stock Company for Pipeline Transportation of Oil Products ‘Transnefteproduct’» – on January 15, 2008, 100 percent of common shares of Transnefteproduct, JSC, were deposited into the authorized capital of Transneft, JSC, as payment made by the state for additional common shares placed by Transneft, JSC.

Natural Monopoly

The subsidiaries of Transnefteproduct, JSC, which are engaged in transportation of oil products, are included in the register of natural monopoly entities.

Tariff Regulation

is performed by the Federal Tariff Service (FTS) of the Russian Federation.

Main Regions of Operation of Companies for Pipeline Transportation of Oil Products

Companies for pipeline transportation of oil products transport oil products by using both direct (from the refinery to the export port or the consumer) and combined transportation patterns (from the refinery – via the OPTP system, then by rail). The estimated share of the oil product transportation market, which is held by the companies for pipeline transportation of oil products, is based on the primary transportation from refineries and includes both direct and combined patterns.

Companies for pipeline transportation of oil products provide services in oil products transportation to the home market and for export. In their main market niche – export logistics of light oil products – companies for pipeline transportation of oil products have the leading position. Their share of the market for transportation of light oil products for export is approximately 46%; specifically, their share of the export market for diesel fuel from the connected refineries is 75%.

In transportation of oil products for export and to regional markets of Russia, the main competitor of the companies for pipeline transportation of oil products is rail transport. Today, rail transport accounts for about 70% of the transportation of light oil products. CPTOP account for about 25% of the transportation of light oil products. The competitive advantage of CPTOP is their ability to transport large quantities at relatively low prices, even to export terminals (Primorsk, Ventspils, and St. Petersburg). The key components of the CPTOP competitive success are high reliability, safety and environmental compatibility of oil products pipeline transportation.

Priority Areas of Activities of Transnefteproduct, JSC, and CPTOP

Pipeline transportation of oil products for export, including to CIS countries, and to the home market of Russia is the core activity of CPTOP: oil products are transported to different regions of Russia, Ukraine, Belarus, Latvia, and Kazakhstan as well as to non-CIS countries. CPTOP also provide services in short-term storage of oil products in tanks and in loading oil products onto rail and road transport.

The threshold level of the tariff set by Federal Tariff Service (FTS) for transportation along the OPTP system is 70% of the price for rail transportation services.

Oil product loading operations are also performed in the Primorsk sea terminal (Leningrad Region).

The total capacity of tank farms for storage of oil products is 4.7 million cubic meters, with the number of tanks totaling 829.

98 pump stations are equipped with 489 main line, booster and filling pump units. The number of oil product pump stations is 70.

Oil products are transported by 7 companies for pipeline transportation of oil products (they are included in the register of natural monopolies):

1. Mostransnefteproduсt, JSC

2. Yugo-Zapad Transnefteproduct, JSC

3. Sibtransnefteproduct, JSC

4. Sredne-Volzhsky Transnefteproduct, JSC

5. Ryazantransnefteproduct, OJSC

6. Uraltransnefteproduct, JSC

7. Balttransnefteproduct, LLC

and by 2 subsidiaries of Yugo-Zapad Transnefteproduct, JSC (Yugo-Zapad Transnefteproduct Joint-Stock Company for pipeline transportation of oil products): Zapad-Transnefteproduct, Private Unitary Production Enterprise, operating in the Republic of Belarus and PrikarpatZapadtrans subsidiary operating in Ukraine.

Transnefteproduct, JSC, holds 34% of the authorized capital of LatRosTrans, LLC, which is responsible for transportation of light oil products in Latvia. The other 66% stake is owned by the Latvian company – Ventspils Nafta.